2006 (6) TMI 521 - HC - Companies Law

Summary

Issues Involved:
1. Entitlement to the bill of lading.
2. Validity and applicability of the arbitration clause.
3. Stay of the suit under Section 45 of the Arbitration and Conciliation Act, 1996.
4. Stay of the pending arbitration proceeding at Hong Kong.

Issue-Wise Detailed Analysis:

1. Entitlement to the Bill of Lading:
The plaintiff and defendant No. 1 entered into a contract for the sale and purchase of iron ore. The plaintiff claimed that defendant No. 1 refused to issue the bill of lading as per mate receipts, which hindered the negotiation of the letter of credit. The court noted that despite initial disputes, the bill of lading was eventually issued, and the goods were released. The plaintiff's claim for damages due to the delay in issuing the bill of lading was acknowledged, as was defendant No. 1's claim for damages due to delayed freight payment.

2. Validity and Applicability of the Arbitration Clause:
The plaintiff argued that the mate receipt and fixture note did not contain an arbitration clause, and even if the bill of lading did, it was not binding as it was issued under court order without prejudice to the parties' rights. The defendant contended that the bill of lading, which included terms of the original charter party, was the concluded contract and contained a binding arbitration clause. The court held that the arbitration clause in the fixture note was not sufficient to bind the plaintiff, as the bill of lading issued under court order did not constitute a concluded contract.

3. Stay of the Suit under Section 45 of the Arbitration and Conciliation Act, 1996:
The court examined whether there was a valid arbitration agreement between the parties. It concluded that neither the fixture note nor the mate receipt contained an arbitration clause, and the bill of lading issued under court order did not create a binding arbitration agreement. Therefore, the defendant's application for a stay of the suit under Section 45 was dismissed.

4. Stay of the Pending Arbitration Proceeding at Hong Kong:
The plaintiff sought to restrain defendant No. 1 from proceeding with arbitration in Hong Kong. The court held that it had no jurisdiction to stay foreign arbitration proceedings, as per the Arbitration and Conciliation Act, 1996. The court left the issue of the pending arbitration to be decided by the appropriate forum.

Conclusion:
- The court confirmed the interim orders directing the issuance of the bill of lading and the continuation of the bank guarantee until the suit's disposal.
- The applications for a mandatory direction to issue the bill of lading (G.A. No. 531 of 2006 and G.A. No. 637 of 2006) were disposed of by confirming the interim orders.
- The application for a stay of the suit (G.A. No. 1164 of 2006) was dismissed.
- The application to stay the arbitration proceeding in Hong Kong (G.A. No. 1649 of 2006) was dismissed.
- The court clarified that it did not decide on the rights and privileges in the pending arbitration and left the issue open for the appropriate forum.